DETROIT − General Motors terminated “several hundred” contract workers which worked at its global technical center in Warren, Michigan, and other locations over the weekend in a bid to cut $2 billion from its budget by the end of next year.
The cuts come almost a month after 5,000 employees have accepted a voluntary departure package that GM says would help it reach nearly 50% of its cost reduction target this year alone and prevent further unintended cuts.
GM spokeswoman Maria Raynal confirmed to the Detroit Free Press, which is part of the USA TODAY Network, on Monday that the automaker laid off “several hundred” contract workers on Saturday, effective immediately. Most were full-time, she said. Raynal could not specify where else the people were laid off, as contract employees are spread throughout the organization.
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“They are in the business of developing global products in all different areas. It can be several different positions,” Raynal said. “It’s part of normal operations and it contributes to that saving, but we don’t share a specific figure.”
The cuts are expected to be permanent.
What does it mean to lay off contractors?
Business expert Erik Gordon of the University of Michigan’s Ross School of Business said firing contract employees is something many companies do to save money.
“Contract workers are in a middle ground where they aren’t company employees, don’t receive benefits, and can’t count on long-term work,” Gordon said. “When contractors are laid off, companies don’t think of forcing them. They just see it as not renewing work that has always been temporary. It’s a tense but common interpretation of ‘forced cuts’ or the “Job Loss”. ‘”
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More GM job cuts expected
Marick Masters, a business professor at Wayne State University, said more job cuts are expected in GM’s workforce as the company funds its transition to all electric vehicles. This could be important as GM will begin negotiating a new contract with the UAW for its hourly workforce this summer.
“GM, like its other Detroit 3 competitors, continually struggles to realign its cost structure from internal combustion to electrification,” Masters said. “This will require reductions in salaried and hourly labor, contract labor and the disposal of obsolete production assets as a result of the change. This is not a fixed target but rather a moving target, and these types of adjustments can be expected as the pace of transition picks up. »
As the Free Press first reported in February, GM cuts hundreds of jobs of its worldwide salaried workforce of 81,000 at the time. GM told employees in a memo that the cuts were performance-based, saying the company needed a top team to execute its transition to all electric vehicles by 2035. About a week later the Free Press was the first to report GM offered the Voluntary Departure Program to most workers around the world, saying that if there were enough takers, it would prevent involuntary job cuts.
Contact Jamie L. LaReau: email@example.com. Follow her on Twitter @jlareauan.